Government to publish guidance on voluntary ethnicity pay gap reporting but will not make reporting mandatory

On 17 March the Government published a policy paper “Inclusive Britain: government response to the Commission on Race and Ethnic Disparities”  in response to the Commission’s 2021 report. Inclusive Britain sets out a wide-ranging Action Plan of measures on race equality across Government as part of a three-part strategy:

  • to ensure that prejudice and discrimination have no place in our society;
  • to promote equality of opportunity and encourage aspiration by nurturing agency; and
  • to actively foster a sense of inclusion and belonging to the UK.

As part of this strategy, the Government will take action to address challenges with ethnicity pay gap reporting to support employers who want to demonstrate and drive greater fairness in the workplace. BEIS will publish guidance to employers on voluntary ethnicity pay reporting in summer 2022. This guidance is intended to give employers the tools to understand and tackle pay gaps within their organisations and build trust with employees. The guidance will encourage employers to use, where appropriate, specific ethnic groups rather than broader categories when publishing their data.

A key recommendation of the Commission’s report was that employers should produce a diagnosis and action plan, setting out the reasons for, and steps to address, disparities in pay. The guidance will include case studies drawn from those leading organisations who have already chosen to report on their ethnicity pay. In this way it hopes to set a benchmark for what a good action plan might most effectively cover.

However, the Government has confirmed that it will not be legislating for mandatory reporting at this stage, citing the desire to avoid imposing new reporting burdens on businesses as they recover from the pandemic.

At a time when the government is renewing its focus on pay gap reporting, employers may wish to use the DLA Piper Diversity & Inclusion index to assess their current D&I strategy. The index covers six key areas of the employment relationship, including Reward. Here, employers can answer a series of questions including those relating to their current approach to ethnicity pay gap reporting. A Red, Green or Amber rating will be awarded depending on alignment with best practice.  Employers who wish to discuss their D&I index results, and see how they benchmark in their sector, are invited to get in touch with our Employment team.

The Government is also taking action to strengthen the enforcement activity of the EHRC. The Cabinet Office will invest in EHRC enforcement activity to challenge race discrimination through investigations and supporting individual cases. The EHRC will also support a wider range of organisations to comply with equality law and develop policies and processes that support equality of opportunity for all. The EHRC has launched a new fund of up to £250,000 to help victims take action against organisations which may have breached equality law. The fund will also support legal practitioners resolve complaints of race discrimination and help employers understand their responsibilities and what the consequences are for not following the law.